Saving Money on Property Taxes
If you own your own home, you’re probably resigned to paying your property taxes each year. Virtually every American county and municipality assesses some type of property tax on the homeowners who live within its borders. These assessments can often seem punitive and arbitrary. Worse, the “mill rates” that determine homeowners’ ultimate property tax liabilities have a nasty habit of increasing at regular intervals. Fortunately, there are a few handy tricks that you might be able to use to save money on your property tax burden.
Compare and Contrast Value
In most neighborhoods, home values tend to rise and fall in tandem. If your next-door neighbor sells his or her house for substantially less than its assessed value, it’s likely that your home would sell at a discount as well. In fact, you might first notice a discrepancy between the “realistic” value of your house and its higher “assessed” value after a neighbor’s disappointing sale. Although a discrepancy between the assessed and actual market value of your home might serve as a short-term hit to your nest egg, it might also be a blessing in disguise. The quest for lower property taxes often begins with an analysis of recent nearby home sales. If you discover that the homes in your area are consistently selling at a discount to their assessed values, you may have grounds to challenge your local property assessor’s methods and seek a revaluation of your property.
Take a Closer Look
If you can’t figure out why your home is the most expensive house on the block, it’s likely that its value is being overestimated. Visit your local housing authority or municipal office and obtain publicly-available data on your neighbors’ homes. Pertinent metrics might include square footage, lot size, age, style, number of bedrooms and bathrooms, and many other objective and subjective data points. Without creating unnecessary tension between yourself and your neighbors, you might also be able to conduct a visual inspection of their properties for comparison purposes. If you’re on good terms with them, they’re likely to sympathize with your desire to save money. While home values are determined by dozens of pertinent factors, there’s no good reason that two similarly-sized homes on two similarly-sized parcels should boast substantially different valuations.
Check Your Local Assessment Records
Using the same publicly-available information, determine the current assessed values of the nearby homes that most closely resemble yours. If all other major factors are equal, your home’s value should fall within 5 percent of the local median value. If your home’s assessed value exceeds this benchmark amount, you’ll have grounds to appeal the findings of your most recent assessment.
Of course, you can’t save money on your property taxes without actually appealing your original assessment. In order to do this, you’ll need to collect all of the evidence that you’ve obtained and submit it to the appropriate authorities. You’ll also need to include a detailed written explanation of the reason for your appeal. It would be helpful to cite such factors as depressed local sale prices, obvious valuation discrepancies between similar houses and properties, and major oversights on the part of your local property assessor. At the very least, your local housing authority will give serious consideration to a well-written, well-researched appeal.
Since property taxes are assessed by local governments, the rules and regulations that govern them can vary widely. While the tactics outlined in this post have helped countless homeowners save substantial amounts of money on their land tax obligations, they may not work in every jurisdiction. Before you make any tax payments or try to adjust your property tax liability in any way, familiarize yourself with the rules in your area. Preparation often pays off in a big way.
TraeMindiola is a partner of a tax assessment company, Republic Property Tax, that specializes in reducing appraised home and business values and subsequent property taxes in Houston, Texas.